-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W2PnsmMCCr5B6FX/p8+RBIzIK1o0lL4KfVh/gKfDr5xAJOFNP7tUWBfjpkJlSZOn swSimkBSjoqpv0BYsUENEA== 0000950168-96-001255.txt : 19960716 0000950168-96-001255.hdr.sgml : 19960716 ACCESSION NUMBER: 0000950168-96-001255 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960430 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960715 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL RECORDERS INC CENTRAL INDEX KEY: 0000853695 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 561362926 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13408 FILM NUMBER: 96595075 BUSINESS ADDRESS: STREET 1: 4900 PROSPECTUS DRIVE STREET 2: SUITE 1000 CITY: RESEARCH TRIANGLE PA STATE: NC ZIP: 27709-4068 BUSINESS PHONE: 9193612155 MAIL ADDRESS: STREET 1: 4900 PROSPECTUS DRIVE STREET 2: SUITE 1000 CITY: RESEARCH TRIANGLE PK STATE: NC ZIP: 27709 8-K/A 1 DIGITAL RECORDERS, INC. 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A-1 Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): April 30, 1996 DIGITAL RECORDERS, INC. (Exact name of registrant as specified in its charter) North Carolina 1-13408 56-1362926 (State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.) Post Office Box 14068 Research Triangle Park, North Carolina 27709-4068 (Address of principal executive offices) (919) 361-2155 (Registrant's telephone number, including area code) 2 ITEM 7. Financial Statements and Exhibits (a) It was impracticable to provide the required Financial Statements of Seller at the time of filing the Form 8-K. In accordance with Item 7(a)(1), the Registrant hereby files the required Financial Statements of Seller as an amendment to the Form 8-K. (b) It was impracticable to provide the Pro Forma Financial Information relative to Seller at the time of filing the Form 8-K. In accordance with Item 7(b)(2), the Registrant hereby files the required Financial Statements as an Amendment to the Form 8-K. (c) The following exhibits are furnished herewith in accordance with the provisions of Item 601 of Regulation S-K: Reg. S-K Exhibit No. Description Item No. * 1 Stock Acquisition Agreement 2 (translated from original German version) * 2 Notary Public Closing Document 2 (translated from original German version) (bullet) 3 Financial Statements of 99 Seller For December 31, 1995 (bullet) 4 Pro Forma Financial 99 Statements ________________ * Previously Filed. (bullet) Filed Herewith. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DIGITAL RECORDERS, INC. Date: July 15, 1996 By: /s/ J. Phillips L. Johnston ----------------------------- J. Phillips L. Johnston, President 4 EX-3 2 EXHIBIT 3 (Letterhead of Deutsche Treuhand-Gesellschaft appears here) TRANSIT-MEDIA GmbH Financial statement December 31, 1995 (with Independent Auditors' Report) (Letterhead of Deutsche Treuhand-Gesellschaft appears here) INDEPENDENT AUDITORS' REPORT The Stockholders TRANSIT-MEDIA GmbH: We have audited the accompanying balance sheet of TRANSIT-MEDIA GmbH as of December 31, 1995 and the related statement of operations and cash flows for the period from July 13 through ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion of these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TRANSIT-MEDIA GmbH at December 31, 1995, and the results of its operations and its cash flows for the period from July 13 through December 31, 1995, in conformity with generally accepted accounting principles. June 28, 1996 (Signature appears here) TRANSIT-MEDIA GMBH Balance Sheet December 31, 1995 Assets 1995 ------ --------------- Current assets: Other receivable DM 15,992.45 --------------- Total current assets 15,992.45 Equipment, less accumulated depreciation of DM 2,161.86 11,464.00 --------------- DM 27,456.45 =============== Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Bank borrowings DM 27,612.38 Trade payables 42,819.09 Other payables 19,843.05 --------------- Total current liabilities 90,274.52 Stockholders' equity: Capital stock 50,000.00 Accumulated deficit (112,818.07) --------------- Net deficit in stockholders equity (62,818.07) --------------- DM 27,456.45 =============== See accompanying notes to financial statements. -2- TRANSIT-MEDIA GMBH Statement of Operations Period from July, 13 through December 31, 1995 1995 --------------- General and administrative expenses DM (114,691.29) --------------- Operating loss (114,691.29) Other income (expense): Interest income 13.26 Interest expense (2,384.74) Other income 4,244.70 --------------- Total other income (expense) 1,873.22 --------------- Net loss DM (112,818.07) =============== See accompanying notes to financial statements. -3- TRANSIT-MEDIA GMBH Statement of Cash Flows Period from July, 13 through December 31, 1995 1995 --------------- Cash flow from operating activities: Net loss DM (112,818.07) Adjustments to reconcile loss to net cash used in operating activities: Depreciation of equipment 2,161.86 Changes in operating assets and liabilities: Increase in other receivables (15,992.45) Increase in bank borrowings 27,612.38 Increase in trade payables 42,819.09 Increase in other liabilities 19,843.05 --------------- Net cash used in operating activities (36,374.14) Cash flow from investing activities: Purchases of equipment (13,625.86) --------------- Net cash used in investing activities (13,625.86) --------------- Net decrease in cash and cash equivalents (50,000.00) --------------- Cash and cash equivalents at beginning of period 50,000.00 --------------- Cash and cash equivalents at end of period DM -- =============== Supplemental Disclosure of Cash Flow Information: Cash paid during the year for interest DM 2,384.74 =============== See accompanying notes to financial statements. -4- TRANSIT-MEDIA GmbH Notes to Financial Statements December 31, 1995 (1) Organization and Summary of Significant Accounting Policies (a) Organization TRANSIT-MEDIA GmbH (The "Company") was established on July, 19, 1995 and began operating in August 1, 1995. The company was still in a start-up phase and expects to earn revenue from its operations beginning in third quarter 1996. The company intends to design and sell information technology to the public transit market and traveler's information stations. (b) Equipment Equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the assets (which range from three to ten years). (c) Use of Estimates in Preparation of Financial Statements Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (2) Other receivables Outstanding receivables mainly represent deductible added value tax which was collected in 1996. Therefore, no allowance for doubtful accounts has been provided. (3) Bank borrowings The funds have been borrowed under a credit line of DM 200,000 secured by a guarantee of Mr. Huber and Mr. and Mrs. Damm (Shareholder -- see note 8.) The bank borrowings have been repaid and the guarantee has been withdrawn in connection with the transfer of shares to Digital Recorders, Inc. (see note 8). -5- TRANSIT-MEDIA GmbH Notes to Financial Statements, continued (4) Other payables Other payables are mainly travel expenses to be paid to company's management. (5) Capital Stock Capital stock of DM 50,000 is authorized and fully paid-in at par value. (6) Leases The Company leases its premises under various operating leases which expire at various times in 1996 and 1997. Rent expense under these operating leases was DM 9,648.01 for the periods ended December 31, 1995. At December 31, 1995 future minimum lease payments under the noncancellable operating leases are as follows: Year ending December 31, 1996 DM 17,540.64 1997 17,540.64 --------- Total minimum lease payments DM 35,081.28 ========= (7) Income Taxes The Company is subject to trade tax on income amounting to 14% of taxable income and to corporation tax which is determined on the basis of a 45% rate applicable to pretax earnings (after deduction on trade tax on income) less a credit of 15% on dividends paid. In addition, a solidarity surcharge of 7.5% of corporation tax is levied. The deferred tax effect has been calculated on the basis of a combined tax rate of 55% assuming the undistributed rate for corporation tax. -6- TRANSIT-MEDIA GmbH Notes to Financial Statements, continued The components of net deferred tax assets as of December 31, 1995 are as follows: Deferred tax assets: Net tax effect of operating loss carryforwards DM 61,000.00 ---------- Total gross deferred tax asset 61,000.00 Less valuation allowance (61,000.00) ---------- Net deferred tax asset DM -- ========== The Company has determined that the need for a valuation allowance arises due to the absence of prior taxable income. At December 31, 1995, the Company has net operating loss carryforwards for corporation tax and trade tax on income purposes of approximately DM 112,000.00 which are available to offset future taxable income. Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 1995 will be allocated to income tax benefit that will be reported in the statement of operations in the year such benefits are realized. (8) Subsequent Events On May 1, 1996 Digital Recorders, Inc. purchased 100% of the shares of the Company from its prior shareholders, Mr. Robert Huber (50%) and Mr. Hans Damm (50%). On May 2, 1996 the new shareholder Digital Recorders, Inc. payed $350,000.00 equivalent to DM 533,537.24, into capital reserves of TRANSIT-MEDIA GmbH. EX-4 3 EXHIBIT 4 PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma combined condensed balance sheet as of March 31, 1996, and the unaudited pro forma combined condensed statements of operations for the year ended December 31, 1995 and for the three month period ended March 31, 1996 combine the historical financial statements of Digital Recorders, Inc. and Transit-Media GmbH after giving effect to the acquisition. The pro forma combined condensed balance sheet gives effect to the acquisition as if it had occurred on March 31, 1996, and the pro forma combined condensed statements of operations for the year ended December 31, 1995 and for the three months ended March 31, 1996 give effect to the acquisition as if it had occurred at the beginning of the period presented, by the purchase method of accounting. The purchase price of the acquisition will be allocated to the tangible and intangible assets and liabilities acquired based upon their respective fair values as of the date of acquisition. The allocation of the aggregate purchase price reflected in the pro forma combined condensed financial statements is preliminary and based upon assumed acquisition dates of January 1, 1995 and March 31, 1996 for the pro forma statement of operations and the pro forma balance sheet, respectively. The final allocation of the purchase price is contingent upon the final valuation of the acquired assets; however, that allocation is not expected to differ materially from the preliminary allocation. The pro forma adjustments and combined amounts are provided for informational purposes only. The pro forma financial information presented is not necessarily indicative of either future results of operations or the results that might have occurred had the acquisition been consummated on the indicated dates. DIGITAL RECORDERS, INC. PRO FORMA BALANCE SHEET MARCH 31, 1996
Digital Transit- Recorders, Media Pro Forma Assets Inc. GmbH Adjustments Pro Forma ------------------------------------------------------------------ Current assets: Cash and cash equivalents $ 909,170 - (35,000)(a) 874,170 Investments 1,957,307 - - 1,957,307 Trade accounts receivable 1,752,327 - - 1,752,327 Inventories 1,180,442 - - 1,180,442 Prepaids and other current assets 169,859 10,996 - 180,855 ------------------------------------------------------------------ Total current assets 5,969,105 10,996 (35,000) 5,945,101 Intangible assets, net 1,876,410 - 106,792 (b) 1,983,202 Other assets, net 310,694 10,907 - 321,601 ------------------------------------------------------------------ $ 8,156,209 21,903 71,792 8,249,904 ================================================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses 818,384 31,989 - 850,373 Bank borrowings - 97,303 - 97,303 ------------------------------------------------------------------ Total current liabilities 818,384 129,292 - 947,676 ------------------------------------------------------------------ Total liabilities 818,384 129,292 947,676 ------------------------------------------------------------------ Stockholders' equity: Preferred stock 35 - - 35 Common stock 267,407 33,855 (33,855)(c) 267,407 Additional paid-in capital 12,552,708 - - 12,552,708 Property held for resale (550,000) - - (550,000) Translation adjustment - 2,771 (2,771)(c) 0 Retained earnings (deficit) (4,932,325) (144,015) 108,418(b)(c) (4,967,922) ------------------------------------------------------------------ Net stockholders' equity 7,337,825 (107,389) 71,792 7,302,228 ------------------------------------------------------------------ $ 8,156,209 21,903 71,792 8,249,904 ==================================================================
See accompanying notes to unaudited pro forma financial data. DIGITAL RECORDERS, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995
Digital Transit- Recorders, Media Pro Forma Inc. GmbH Adjustments Pro Forma ------------------------------------------------------------- Net sales $ 6,362,429 - - 6,362,429 Cost of sales 3,170,171 - - 3,170,171 ------------------------------------------------------------- Gross profit 3,192,258 - - 3,192,258 Selling, general and admin. expenses 2,865,626 163,442 28,478(b) 3,057,546 Research and development expenses 379,870 - - 379,870 ------------------------------------------------------------- Operating income (loss) (53,238) (163,442) (28,478) (245,158) Other income 208,141 2,669 - 210,810 ------------------------------------------------------------- Income (loss) before income taxes 154,903 (160,773) (28,478) (34,348) Income taxes 10,000 - - 10,000 ------------------------------------------------------------- Net income (loss) $ 144,903 (160,773) (28,478) (44,348) ============================================================= Net income (loss) per common and common equivalent share $ 0.00 (3.22) - (0.08) ============================================================= Weighted average number of common and common equivalent shares outstanding 2,652,892 50,000 - 2,652,892 =============================================================
See accompanying notes to unaudited pro forma financial data. DIGITAL RECORDERS, INC. PRO FORMA INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 1996
Digital Transit- Recorders, Media Pro Forma Inc. GmbH Adjustments Pro Forma ------------------------------------------------------------- Net sales $ 1,750,568 - - 1,750,568 Cost of sales 763,787 - - 763,787 ------------------------------------------------------------- Gross profit 986,781 - - 986,781 Selling, general and admin. expenses 746,549 64,735 7,119(b) 818,403 Research and development expenses 87,732 - - 87,732 ------------------------------------------------------------- Operating income (loss) 152,500 (64,735) (7,119) 80,646 Other income (expense) 45,362 (113) - 45,249 ------------------------------------------------------------- Income (loss) before income taxes 197,862 (64,848) (7,119) 125,895 Income taxes 10,000 - - 10,000 ------------------------------------------------------------- Net income (loss) $ 187,862 (64,848) (7,119) 115,895 ============================================================= Net income (loss) per common and common equivalent share $ 0.06 (1.30) - 0.03 ============================================================= Weighted average number of common and common equivalent shares outstanding 2,674,075 50,000 - 2,674,075 =============================================================
See accompanying notes to unaudited pro forma financial data. DIGITAL RECORDERS, INC. NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA MARCH 31, 1996 1) (a) Represents the total amount of cash paid for the acquisition. (b) Intangible assets from the acquisition totalled $142,389, which were amortized $28,478 during the year ended December 31, 1995 and $7,119 during the quarter ended March 31, 1996. Such intangible assets are being amortized on a straight-line basis over five years. (c) Since the transaction was recorded by the purchase method of accounting, the equity of the seller was eliminated. 2) The assets and liabilities of Transit-Media GmbH are translated at the current exchange rates at March 31, 1996, while income and expenses are translated at average rates for the period presented. -----END PRIVACY-ENHANCED MESSAGE-----